The $3.2 billion Idaho Public Employee Retirement System, Boise, expects to drop real estate as an asset class, said CIO Robert Maynard. The fund is doing an asset allocation study and, while he doesn't want to predict what changes the study might recommend, Mr. Maynard said, ``I doubt we will continue to use real estate as an asset class.''
Dorn Helliesen & Cottle is assisting in the study, which Mr. Maynard expects to be presented to the board of trustees around February. Milliman & Robertson just completed the system's actuarial study, allowing the asset allocation study to begin. The fund's current allocation is 50% domestic equities, 12% international equities, 33% domestic and global fixed income, 1% cash and 4% real estate.
Vermont State Treasurer Jim Douglas said he will reduce the number of money managers used by the $500 million State Employees' Retirement Plan, Montpelier, and may index portions of the fund. The nine managers are performing well and their fees are not excessive, Mr. Douglas says. It's just that the fund is trying to reduce costs and is paying a lot of high initial fees. No manager is being terminated immediately; as manager contracts expire, trustees will decide whether to keep the manager. Large-cap stock might be the best candidate to be passively managed.
The $2 billion Arkansas Public Employees Retirement System, Little Rock, will drop Mitchell Hutchins Asset Management and conduct a search for a small-cap value manager to take over the $110 million portfolio. Kie Hall, executive director, said the departure of the Mitchell Hutchins' small-cap value team for Rothschild Asset Management prompted the change. Mr. Hall said RFPs will be issued before the end of the year, and a final selection should be made by February. Callan Associates is the consultant.
Fidelity Institutional Retirement Services is adding a formal alliance of mutual funds managed by outside fund families to its 401(k) and 403(b) programs. The FundsNet program will provide record keeping and full participant services for more than 55 funds from between 10 and 15 outside managers. Among the outside companies participating are Founders Asset Management, Franklin/Templeton Group, INVESCO Funds Group, Janus Capital, Neuberger & Berman, PIMCO, Strong Capital Management, USAA Investment Management and Warburg Pincus Counsellors. More will be added later, said Robert L. Reynolds, president.
Dow Chemical Co., Midland, Mich., is changing the structure of its pension plan, effective Jan. 1, so employees will accrue benefits uniformly over their career, instead of toward the end. ``With employees being more mobile and having more employers over their career, it makes sense to design a pension plan that fits with today's work force,'' said Allan Fowler, director of compensation and benefits for Dow North America.
Developed by employee benefit consultants Watson Wyatt Worldwide, the new Dow Employees' Pension Plan will benefit employees who join Dow later in their career, or leave the company before retirement. Yet, because some employees may fare worse under the new plan, the company is offering ``bridging benefits'' to protect older employees through higher accrual rates. Additionally, employees who leave the company within the next decade will receive a pension based on the higher of the two formulas.
Les Schwab Tire Centers, Prineville, Ore., is studying how to allocate an $11 million contribution it plans to make to its $125 million profit-sharing fund, said Jim Goad, manager-finance. He said the fund is considering assigning half of the contribution to new managers and half to some existing managers. The fund's board is expected to decide in January on how to allocate the contribution to the company-directed investment fund and whether then to search for managers. R.V. Kuhns & Associates is assisting.